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Cut in U.S. Housing Aid Raises Concerns for Poor

The New York City Housing Authority said yesterday that the federal government would provide $50 million less than what the agency needs to provide rent vouchers for low-income residents this year, a gap that agency officials fear could hamper their ability to house the poorest tenants.

The budget gap, part of a nationwide squeeze by the Bush administration in spending on housing programs, could mean that the authority would have to reduce the number of planned vouchers by more than 6,000 this year from the city's current 118,000. Agency officials have said they hope to avoid evicting any tenants, but will most likely cut back on new tenants and will not be able to replace those who leave.

"The burden this reality places on the city's public housing authority will be far-reaching and test our ability to assist families who need affordable housing and rely on Section 8 assistance," said Tino Hernandez, the housing authority's chairman. "The reality is our options are very limited, given the magnitude of the federal government's funding reduction."

At the same time, the city's Department of Housing Preservation and Development reported that the federal Department of Housing and Urban Development had agreed to increase its financing for rent vouchers by $27 million. The department generally provides Section 8 vouchers to residents with higher incomes than the tenants of the Housing Authority, who are among the city's poorest residents.

Taken together, the various city agencies issue about 118,000 Section 8 vouchers at a cost of about $1 billion. The net loss to the city, given the increase and the shortfall, will be about $23 million.

And the State Division of Housing and Community Renewal said that it had received $1.8 million less than it needed for the rent vouchers it distributes, including $500,000 for New York City.

In interviews yesterday, city officials said they were still coming to grips with the impact of HUD's decisions on the Section 8 program, which allows poor, disabled or elderly tenants to live in private apartments and pays part of their rent directly to landlords. But in the past, officials have said that any shortfall could force them to limit the number of vouchers for families on years-long waiting lists or pay landlords in the program less money. That could mean that landlords would drop out of the program, giving poor tenants fewer choices.

"These numbers, if put into effect, would be devastating to the people who can least afford it in New York," said Senator Charles E. Schumer, a New York Democrat, who vowed to fight the spending decision. "Section 8 is a successful program and there is no reason that HUD should take a meat-ax approach. We have been promised a appeal, and we hope that HUD will re-examine these numbers."

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Around the country, 492 out of an estimated 2,500 housing agencies that issue vouchers had asked HUD for more money. Late yesterday, Donna White, a spokeswoman for HUD, said that she did not have a specific breakdown of how many of those requests were successful and for how much money.

But in a letter on Friday to housing agencies, David A. Vargas, HUD's director of housing voucher programs, explained that the agency had determined that the total amount of money needed for voucher renewals, based on costs through July 2004, was $13.9 billion. But because Congress appropriated only $13.4 billion, and is requiring housing agencies to stay within their allocations for the entire year, he said, HUD had to pare the financing to all housing agencies by 4 percent.

In the past, the federal housing department financed agencies for all the vouchers they were allowed to issue, based on actual costs. But last year, the Bush administration, concerned about the rising costs of Section 8, began to limit the program's flexibility and move toward fixed costs.

To HUD officials and some housing groups, this approach is preferable because it forces housing agencies to plan more effectively and contain costs.

But the problem this year, some housing advocacy groups contend, is that Congress allocated less money to adjust for possible needs after the July cutoff date. Agencies had had a reserve fund of up to one month in subsidies after 2001, but that reserve is about to be reduced to one week. As a result, many agencies will probably offer fewer vouchers so as not to run out of money.

The city's housing department received more money than the housing authority because it calculates its costs differently, local officials said. In addition, they said, HUD's formula, set by Congress, tends to favor the working-class and middle-class families who receive their vouchers from the housing department. Many of those families get rent vouchers because they live in Mitchell-Lama developments or other buildings with subsidies that are set to expire.

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A version of this article appears in print on January 27, 2005, on Page B00001 of the National edition with the headline: HUD Aid Short By $50 Million, City Reports. Order Reprints|Today's Paper|Subscribe